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Chapter 13 Version 6e 1©2002 South-Western
chapter
RetailingRetailing
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Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 13 Version 6e 2©2002 South-Western
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Learning ObjectivesLearning Objectives
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1.1. Discuss the importance of retailing in the Discuss the importance of retailing in the U.S. economy.U.S. economy.
2. Explain the dimensions by which retailers 2. Explain the dimensions by which retailers can be classified.can be classified.
3. Describe the major types of retail 3. Describe the major types of retail operations.operations.
Chapter 13 Version 6e 3©2002 South-Western
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Learning Objectives (continued)Learning Objectives (continued)
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4. Discuss nonstore retailing techniques.4. Discuss nonstore retailing techniques.
5. Define franchising and describe its two 5. Define franchising and describe its two basic forms.basic forms.
6. List the major tasks involved in developing 6. List the major tasks involved in developing a retail marketing strategy.a retail marketing strategy.
Chapter 13 Version 6e 4©2002 South-Western
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Learning Objectives (continued)Learning Objectives (continued)
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7. Discuss the challenges of expanding 7. Discuss the challenges of expanding retailing operations into global markets.retailing operations into global markets.
8.8. Describe future trends in retailing.Describe future trends in retailing.
Chapter 13 Version 6e 5©2002 South-Western
Learning Objective Learning Objective 11
Discuss the importance Discuss the importance of retailing in the U.S. economy.of retailing in the U.S. economy.
Chapter 13 Version 6e 6©2002 South-Western
RetailingRetailing11
All the activities directly
related to the sale of goods
and services to the ultimate
consumer for personal,
non-business use.
Chapter 13 Version 6e 7©2002 South-Western
The Role of RetailingThe Role of Retailing
Retailing is one of the largest employers
Retailers ring up almost a third of the U.S. GDP
Industry is dominated by a few giant organizations, such as Wal-Mart
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Chapter 13 Version 6e 8©2002 South-Western
Learning Objective Learning Objective 22
Explain the dimensions byExplain the dimensions by which retailers can be classified.which retailers can be classified.
Chapter 13 Version 6e 9©2002 South-Western
Classification of Retail OperationsClassification of Retail Operations
ClassificationClassificationof of
Retail Retail EstablishmentsEstablishments
ClassificationClassificationof of
Retail Retail EstablishmentsEstablishments
OwnershipOwnership
Level of ServiceLevel of Service
Product AssortmentProduct Assortment
PricePrice
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Chapter 13 Version 6e 10©2002 South-Western
OwnershipOwnership
IndependentRetailers
IndependentRetailers
Chain StoresChain Stores
FranchisesFranchises
ClassificationClassificationof of
OwnershipOwnership
ClassificationClassificationof of
OwnershipOwnership
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Chapter 13 Version 6e 11©2002 South-Western
Level of ServiceLevel of Service22
Full ServiceFull Service Self Service Self Service
Discount storesDiscount stores Exclusive storesExclusive storesFactory outlets Warehouse clubs
Factory outlets Warehouse clubs
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Classification SummaryClassification Summary22
Type of RetailerType of RetailerType of RetailerType of Retailer
Department StoreDepartment Store
Specialty StoreSpecialty Store
SupermarketSupermarket
Convenience StoreConvenience Store
DrugstoreDrugstore
Full-line DiscounterFull-line Discounter
Specialty DiscounterSpecialty Discounter
Warehouse ClubsWarehouse Clubs
Off-price RetailerOff-price Retailer
RestaurantRestaurant
Service Service LevelLevel
Service Service LevelLevel
Mod Hi-HighMod Hi-High
HighHigh
LowLow
LowLow
Low-ModLow-Mod
Mod-LowMod-Low
Mod-LowMod-Low
LowLow
LowLow
Low-HighLow-High
Assort-Assort-mentment
Assort-Assort-mentment PricePricePricePrice GrossGross
MarginMarginGrossGrossMarginMargin
BroadBroad
NarrowNarrow
BroadBroad
Med-NarrowMed-Narrow
MediumMedium
Med-BroadMed-Broad
Med-BroadMed-Broad
BroadBroad
Med-NarrowMed-Narrow
Med-NarrowMed-Narrow
Mod-HighMod-High
Mod-HighMod-High
ModerateModerate
Mod HighMod High
ModerateModerate
Mod LowMod Low
Mod Lo-lowMod Lo-low
Low-lowerLow-lower
LowLow
Low-HighLow-High
Mod HighMod High
HighHigh
LowLow
Mod HighMod High
LowLow
Mod LowMod Low
Mod LowMod Low
LowLow
LowLow
Low-HighLow-High
Chapter 13 Version 6e 13©2002 South-Western
Gross MarginGross Margin
The amount of money the
retailer makes as a
percentage of sales after
the cost of goods sold is
subtracted.
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Chapter 13 Version 6e 14©2002 South-Western
Learning Objective Learning Objective
Describe the major types Describe the major types of retail operations.of retail operations.
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Chapter 13 Version 6e 15©2002 South-Western
Major Types of Retail OperationsMajor Types of Retail OperationsDepartment StoresDepartment Stores
Specialty StoresSpecialty Stores
SupermarketsSupermarkets
DrugstoresDrugstores
Convenience StoresConvenience Stores
Discount StoresDiscount Stores
RestaurantsRestaurants
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Chapter 13 Version 6e 16©2002 South-Western
Scrambled MerchandisingScrambled Merchandising33
The tendency to offer a
wide variety of
nontraditional goods and
services under one roof.
Chapter 13 Version 6e 17©2002 South-Western
Categories of Discount StoresCategories of Discount Stores
Categories Categories of Discount of Discount
StoresStores
Full-LineDiscounters
Discount Specialty Stores
WarehouseClubs
Off-PriceDiscount Retailers
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Chapter 13 Version 6e 18©2002 South-Western
Mass MerchandisingMass Merchandising
Retailing strategy using
moderate to low prices on
large quantities of
merchandise and lower
service to stimulate high
turnover of products.
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Chapter 13 Version 6e 19©2002 South-Western
Hypermarket and SupercenterHypermarket and Supercenter33
HypermarketHypermarket A large retail store combining
a supermarket and a full-line discount store.
A large retail store combining a supermarket and
a full-line discount store.
SupercenterSupercenterRetail store combining groceriesand general merchandise goods
with a wide range of services.
Retail store combining groceriesand general merchandise goods
with a wide range of services.
Chapter 13 Version 6e 20©2002 South-Western
Learning Objective Learning Objective
Discuss nonstore retailing techniques.Discuss nonstore retailing techniques.
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Chapter 13 Version 6e 21©2002 South-Western
Nonstore RetailingNonstore Retailing
Major FormsMajor Formsofof
NonstoreNonstoreRetailingRetailing
Major FormsMajor Formsofof
NonstoreNonstoreRetailingRetailing
Automatic VendingAutomatic Vending
Direct RetailingDirect Retailing
Direct MarketingDirect Marketing
Electronic RetailingElectronic Retailing
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Chapter 13 Version 6e 22©2002 South-Western
Direct RetailingDirect Retailing44
Door-to-DoorDoor-to-Door
Office-to-OfficeOffice-to-Office
Home SalesParties
Home SalesParties
Direct RetailersDirect Retailerssell products:sell products:
Direct RetailersDirect Retailerssell products:sell products:
Chapter 13 Version 6e 23©2002 South-Western
Direct MarketingDirect Marketing44
TelemarketingTelemarketing
Catalogs & Mail OrderCatalogs & Mail Order
Direct MailDirect Mail
Types Types of of
DirectDirectMarketingMarketing
Types Types of of
DirectDirectMarketingMarketing
Electronic RetailingElectronic Retailing
Chapter 13 Version 6e 24©2002 South-Western
Electronic RetailingElectronic Retailing
On-Line RetailingOn-Line Retailing
Shop-at-Home NetworksShop-at-Home NetworksTypes Types
ofofElectronicElectronicRetailingRetailing
Types Types ofof
ElectronicElectronicRetailingRetailing
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Chapter 13 Version 6e 25©2002 South-Western
Learning Objective Learning Objective
Define franchising and Define franchising and describe its two basic forms.describe its two basic forms.
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Chapter 13 Version 6e 26©2002 South-Western
Basic Forms of FranchisingBasic Forms of Franchising
Business FormatFranchising
Business FormatFranchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Basic FormsBasic Formsof of
FranchisingFranchising
Basic FormsBasic Formsof of
FranchisingFranchising
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Chapter 13 Version 6e 27©2002 South-Western
Basic Forms of FranchisingBasic Forms of Franchising
Product and Trade Name Franchising
Product and Trade Name Franchising
Dealer agrees to sell certain products provided by a manufacturer
or wholesaler.
Dealer agrees to sell certain products provided by a manufacturer
or wholesaler.
BusinessFormat
Franchising
BusinessFormat
Franchising
An ongoing business relationship between a franchiser
and a franchisee.
An ongoing business relationship between a franchiser
and a franchisee.
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Chapter 13 Version 6e 28©2002 South-Western
Learning Objective Learning Objective 66
List the major tasks involved List the major tasks involved in developing a retail marketing strategy.in developing a retail marketing strategy.
Chapter 13 Version 6e 29©2002 South-Western
Retail Marketing StrategyRetail Marketing Strategy
Develop the “Six P’s”Develop the “Six P’s”
Define & Select a Target Market
Define & Select a Target MarketKey Tasks Key Tasks
in in StrategicStrategicRetailingRetailing
Key Tasks Key Tasks in in
StrategicStrategicRetailingRetailing
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Chapter 13 Version 6e 30©2002 South-Western
Defining a Target MarketDefining a Target Market
STEP 1:Segment the Market
STEP 1:Segment the Market
DemographicsDemographics
GeographicsGeographics
PsychographicsPsychographics
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Choosing the Retailing MixChoosing the Retailing Mix
STEP 2:Choose the Retailing Mix
STEP 2:Choose the Retailing Mix
ProductProduct
PricePrice
PromotionPromotion
PlacePlace
PersonnelPersonnel
PresentationPresentation
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Chapter 13 Version 6e 32©2002 South-Western
The Retailing MixThe Retailing Mix
TargetTargetMarketMarket
ProductProduct
PricePrice
PromotionPromotion
PlacePlace
PersonnelPersonnel
PresentationPresentation
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Chapter 13 Version 6e 33©2002 South-Western
Product OfferingProduct Offering
The mix of products offered
to the consumer by the
retailer; also called the
product assortment or
merchandise mix.
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Chapter 13 Version 6e 34©2002 South-Western
Retail Promotion StrategyRetail Promotion Strategy66
RetailRetailPromotion Promotion
StrategyStrategy
RetailRetailPromotion Promotion
StrategyStrategy
AdvertisingAdvertising
Public RelationsPublic Relations
PublicityPublicity
Sales PromotionSales Promotion
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The Proper LocationThe Proper Location66
Large, long-term commitment of resources
Location will affect future growth
Local environment may change over time
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LocationLocation66
FreestandingStore
FreestandingStore
ShoppingCenter
ShoppingCenter
MallMall
LocationLocationDecisionsDecisions
LocationLocationDecisionsDecisions
Chapter 13 Version 6e 37©2002 South-Western
Shopping Center and MallShopping Center and MallLocationsLocations
AdvantagesAdvantages
Design attracts shoppers
Anchor stores draw customers
Ample parking Unified image
DisadvantagesDisadvantages
Expensive leases Failure of common
promotion efforts Lease restrictions Anchor store
domination Direct competitors
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Chapter 13 Version 6e 38©2002 South-Western
PricePrice
QualityImage
QualityImage
High PriceHigh Price Low Price Low Price
Good ValueGood Value
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Chapter 13 Version 6e 39©2002 South-Western
Presentation of the Retail StorePresentation of the Retail Store
Employee Type & DensityEmployee Type & Density
Merchandise Type & DensityMerchandise Type & Density
Fixture Type & DensityFixture Type & Density
SoundSound
OdorsOdors
Visual FactorsVisual Factors
Factors Factors inin
CreationCreationof a Store’sof a Store’s
Atmosphere Atmosphere
Factors Factors inin
CreationCreationof a Store’sof a Store’s
Atmosphere Atmosphere
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Chapter 13 Version 6e 40©2002 South-Western
Personnel and Customer ServicePersonnel and Customer Service
Suggestive SellingSuggestive Selling
Trading UpTrading UpTwo Common Two Common
SellingSellingTechniquesTechniques
Two Common Two Common SellingSelling
TechniquesTechniques
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Chapter 13 Version 6e 41©2002 South-Western
Learning Objective Learning Objective
Discuss the challenges of Discuss the challenges of expanding retailing operations expanding retailing operations
into global markets.into global markets.
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Chapter 13 Version 6e 42©2002 South-Western
Global RetailingGlobal Retailing
Spread of communication and mass media
Spread of communication and mass media
Lowering of trade barriers and tariffsLowering of trade barriers and tariffs
Growth potential in underserved
markets
Growth potential in underserved
markets
Reasons for Reasons for Global ExpansionGlobal Expansion
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Chapter 13 Version 6e 43©2002 South-Western
Global RetailingGlobal Retailing
Market Size & EconomicsMarket Size & Economics
Infrastructure & DistributionInfrastructure & Distribution
CompetitionCompetition
OperationsOperations
Financial & Tax ReportingFinancial & Tax Reporting
Merchandise AcceptabilityMerchandise Acceptability
Partnering CapabilityPartnering Capability
Factors UsedFactors Usedto Analyzeto Analyze
Global Retail Global Retail MarketsMarkets
Factors UsedFactors Usedto Analyzeto Analyze
Global Retail Global Retail MarketsMarkets
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Chapter 13 Version 6e 44©2002 South-Western
Global RetailingGlobal Retailing
Prerequisites forPrerequisites forGoing GlobalGoing Global
Secure DomesticPosition
Secure DomesticPosition
Long-TermPerspectiveLong-TermPerspective
ConsistentGlobal andCorporateStrategies
ConsistentGlobal andCorporateStrategies
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Chapter 13 Version 6e 45©2002 South-Western
Learning Objective Learning Objective
Describe future trends in retailing.Describe future trends in retailing.
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Chapter 13 Version 6e 46©2002 South-Western
Trends in RetailingTrends in Retailing
Trends in Trends in RetailingRetailing
EntertainmentEntertainment
Convenience and EfficiencyConvenience and Efficiency
Customer ManagementCustomer Management
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Chapter 13 Version 6e 47©2002 South-Western
Customer ManagementCustomer Management88
Customer Relationship
Marketing
Customer Relationship
Marketing
LoyaltyProgramsLoyalty
Programs
ClientelingClienteling
CustomerCustomerManagementManagement
StrategiesStrategies
CustomerCustomerManagementManagement
StrategiesStrategies
